Half-price condos lure buyers to Harlem

More buyers are heading to the northern part of Manhattan seeking cheaper luxury apartments.

(Bloomberg) --
Jason and Robyn Turetsky watched from their window as, brick by brick, a new condominium development rose across 116th Street in New York's Harlem.

The Turetskys, who married in December, decided to buy a three-bedroom, 1,500-square-foot (140-square-meter) unit at the Adeline, right across from their current rental. Staying in the neighborhood presented a better value than anywhere else they'd considered, including the Upper East Side and Upper West Side, where Robyn lived before moving in with Jason, the couple said.

"For the amenities that were going to be provided at the Adeline and the size of the apartment, we could just get much more for our money in Harlem," said Robyn Turetsky, a 28-year-old clinical dietitian.

The Adeline is one of at least three luxury-condo buildings opening in the next six months in central Harlem, a historically black neighborhood that has gentrified as Manhattanites seeking cheaper real estate head to the northern part of the borough. Buyers like the Turetskys are fueling demand that led to homes selling at the quickest pace on record in the second quarter.

Homes in central Harlem were on the market for a median of 49 days, a 30% decrease from a year earlier and a shorter amount of time than in midtown and the Upper East Side, according to Streeteasy, a New York real estate website owned by Zillow Inc. Sales rose 57% in the period, while transactions Manhattanwide fell, the company's data show.

Values triple

The latest real estate surge follows a transformation over the past two decades that already has enriched succeeding waves of homeowners. Central Harlem condo values have almost doubled since 2003 and more than tripled over the past 20 years, according to the Furman Center for Real Estate and Urban Policy at New York University.

In that time, developments have replaced many of the vacant lots and burned-out buildings that blighted the community during the 1970s and 1980s, while a commercial revival has brought retail and restaurants, museums and concert venues.

Now it's all about relative value, said Alan Lightfeldt, a data scientist at StreetEasy. The median sales price for a condo in central Harlem, at $600,000 in 2013, was about half that in core Manhattan, defined as below 96th Street on the east side and 110th Street to the west, according to the Furman Center.

Central Harlem is bordered by Fifth Avenue on the east, Morningside Park to Edgecombe Avenue on the west, Central Park on the south and Harlem River on the north.

Few options

"If you're a buyer looking to buy something in our bottom price tier, you really don't have that many options south" of Central Park, Mr. Lightfeldt said. "Buyers are really needing to go to places like central Harlem, if they want to remain in Manhattan, to get that kind of deal."

In addition to the Adeline, opening in November, luxury-condo buildings One Morningside Park on 110th Street and Uptown 58 on 129th Street are slated to debut by early next year. They're offering amenities such as fitness centers and rooftop gardens not typically seen in the area's smaller buildings.

Steven Pasquale, a 37-year-old actor who starred in the Broadway musical The Bridges of Madison County, recently bought a two-bedroom condo in a new development a few blocks north of 125th Street. He favors the area over his current home in Tribeca, which he said has become a wealthy enclave that lacks the authenticity that made him fall in love with New York when he moved to the city 20 years ago.

Mr. Pasquale, who played firefighter Sean Garrity for seven seasons in the TV series Rescue Me, first noticed central Harlem when he filmed several scenes for the show there.

'Last wave'

"I feel like I'm on the last wave of potential buyers that will be able to get a good bang for their buck," Mr. Pasquale said. "In very short order, I imagine Harlem will be as pricey as the rest of Manhattan."

Mr. Pasquale said he paid "slightly less" than $1,000 a square foot for his condo. That compares with the Manhattanwide median of $1,172 a square foot for all homes sold in the second quarter, according to StreetEasy.

Harlem's makeover had its roots in the 1990s. In 1994, Deborah Wright, now chairman and chief executive officer of Carver Bancorp Inc., took over as commissioner of the New York City Department of Housing Preservation and Development. At the time, it managed more than 58,000 units of housing abandoned by private owners.

Lottery purchases

Through a program called HomeWorks, part of a $5.1 billion investment in New York City housing, the city transferred properties to experienced developers, who renovated and sold the buildings to owners at market rates.

"HomeWorks was a program designed to get these small buildings back into private hands and draw families back to these blocks," Ms. Wright said in an e-mail.

Buyers entered a lottery for a chance to purchase renovated homes ranging from $315,000 to $499,000. Several of the HomeWorks properties, many of which were brownstones, have now sold for more than $2 million, said Willie Kathryn Suggs, who runs a real estate brokerage in upper Manhattan.

Along with the turnaround came a significant drop in crime. Major crimes fell 75% from 1990 to 2013 in the 28th precinct, which covers 110th Street to 127th Street from Fifth Avenue to Morningside Avenue, according to the New York Police Department's CompStat unit. Murders in the area dropped from 41 in 1990 to two in 2013.

Ms. Suggs said the types of neighbors she notices while walking around central Harlem, once a haven for drug dealers and prostitutes, have changed too.

"On Saturday and Sunday afternoons you see the strollers, you see the nannies," she said. "I knew it was over when I saw the nannies."

Adeline sales

While the Turetskys declined to say how much they paid for their place at the Adeline, the building's 15 units still available range from $1.2 million for a 1,050-square-foot two- bedroom to $2.75 million for an 1,850-square-foot four-bedroom with a private terrace. The property has sold 80% of its 83 units in its first six months on the market, said Julia Boland, associate broker at Halstead Property Development Marketing.

The building features penthouse apartments with floor-to-ceiling windows and views of Marcus Garvey Park to the north or midtown skyscrapers to the south, as well as oak floors and quartz counter tops.

High demand and low inventory are driving up prices in neighborhoods across the city, making prospective Manhattan buyers look north to Harlem, where access to subways is a major selling point, said Ms. Boland, who is marketing the Adeline.

Frustrated buyers

"Buyers were frustrated because they had a significant amount of money to spend but just couldn't find what they were looking for," Ms. Boland said during a walk-through of the Adeline. "You should be able to find a lovely two-bedroom for under $1.5 million, and here they can."

Condo prices in Harlem rose 30 percent to $950 a square foot in the first six months of 2014 from the same period a year earlier, according to data provided by Halstead.

In the past decade, greater numbers of restaurants and national brands, such as H&M, Old Navy and the Gap, have come to Harlem. Jeff Krantz, a real estate broker with Halstead Property, said future additions, including a Whole Foods set to open in 2016 on 125th Street and Lenox Avenue, will continue to attract homebuyers.

Frederick Douglass Boulevard has become the area's restaurant row, while two avenues over, Red Rooster attracts diners from around the city seeking the creations of Marcus Samuelsson, who won a James Beard Award as the best chef in New York City in 2003.

Retail diversity

"You had in uptown a retail environment, which was very much tire shop, bodega, hair salon, repeat," said Robert Shapiro, vice president of sales at Massey Knakal Realty Services. "Now you're seeing a diversity of retail up there, which is benefiting everybody."

Not everyone is happy about the changes in Harlem. Gentrification threatens the traditions of a neighborhood that became a mecca for blacks from all over America and gave birth to jazz, critics including film director Spike Lee complain.

Cleveland Manley, 63, the president of the 118th Street Block Association, said he worries that the newcomers and all the money will change the character of the neighborhood where he's lived more than 40 years. These days, when block parties and barbecues run late on a summer night, with neighbors socializing and music playing, some of the newer residents have a tendency to complain about the noise and the blocked streets.

'Different standard'

"When people spend that kind of money, they want what they want," said Mr. Manley, who lives in a rent-regulated apartment on 118th Street between Frederick Douglass Boulevard and Saint Nicholas Avenue. "We used to barbecue whenever we wanted, and the police wouldn't bother us. Now we've got to get a permit for everything. When we do things, now we have to go by a different standard."

Blacks are accounting for a shrinking share of central Harlem residents. About 63% of the population was black in 2010, down from almost 88 percent in 1990, according to Census Bureau data compiled by New York City.

The median household income in central Harlem was $37,460 in 2012, according to the Furman Center. That year the median income for the entire borough was $68,227.

'Staying diverse'

"I find it too bad when people try to couch it in old versus new," said Susannah Koteen, co-owner of Lido, an Italian restaurant that opened in 2011 on Frederick Douglass, and president of the Frederick Douglass Boulevard Alliance. "I don't find it that way. This is staying a great neighborhood. It's staying diverse. New condominiums bring new people and the ability for businesses to survive."

For Jason Turetsky, the 19th-century homes and historic sites that surround his new development have been a source of pride, which he has highlighted to visiting friends and family on tours of the neighborhood. The Turetskys will move into their new condo at the Adeline in November.

"You can live in a lot of different neighborhoods where there's just new condos," he said. "You can be in Jersey City or Long Island City, but what's so special about Harlem is the way the new and the old work together."

Add a Comment

Please leave a comment

We welcome your thoughtful comments. Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Crain's New York Business. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification. Comments may be used in the print edition at editorial discretion.